Why not wait until I get sick to buy health insurance?

Health insurance is expensive, so why not wait for it when you need it? Why pay a few months’ premium when you probably won’t need to use it?

Since Affordable Care Act (ACA) rules require health insurance companies to cover pre-existing conditions, it seems cheaper and safer to delay buying coverage until you need it. However, there are compelling reasons not to wait.

Open enrollment is not open

Unless you have experienced a qualifying event, as described in more detail below, you can only purchase health insurance on the individual market (including through health insurance exchanges as well as off exchanges) during the open enrollment period – which is available to everyone Period health insurance.

If you don’t have health insurance during Open Enrollment, you’ll have to wait until next year’s Open Enrollment for another opportunity. If you get sick during this period, you may be out of luck.

In most states, the open enrollment period for individual/family (self-purchased) health insurance is November 1 through January 15, although some states operate deals with different deadlines.

If you work for an employer that provides health insurance, you are also limited to enrolling during open enrollment. Open enrollment for employer-sponsored programs is generally much shorter than the window applicable to individual markets. Employers can set their own open registration windows – there is no fixed timetable for individual markets. They usually occur in the fall and begin coverage on January 1, but employer-sponsored plans may have a different plan year than a calendar year, so you may find your employer has open enrollment at different times of the year.

Either way, your opportunity to sign up for employer-provided coverage will be limited to a short window each year. You can’t wait until you need medical care to sign up for health insurance.

Exceptions to Open Registration

Certain changes in your life (but not your health) will create a special enrollment period during which you can purchase health insurance or change your health plan. Special enrollment periods apply to employer-sponsored coverage as well as coverage you purchase yourself.

Eligible activities covered by individual markets include:

  • For reasons other than non-payment of premiums or fraud (for example, leaving and not getting employer-sponsored insurance, or getting divorced and not getting your plan through your ex).
  • Get a dependent or become a dependent. Getting married, having children, or adopting children are examples.
  • Permanent relocation can create a special registration period. But since mid-2016, this only applies if you’ve already been insured at your previous location – if you move, you’ll have the opportunity to change your insurance, but not the first time.

For employer-sponsored plans, qualifying events are similar with some differences (here are federal regulations governing special enrollment periods for employer-sponsored insurance).

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Special admissions are time-limited. For employer-sponsored programs, you generally only have 30 days from the qualifying event to enroll. In the Personal Market, you will have 60 days for some eligible events to trigger a registration window before and after the event. However, if you do not register during the applicable window, you must wait for the next open registration period.

Health Insurance Waiting Period

Health insurance does not take effect on the date you purchase it. Whether you’re insured through a job or through a company you find on a health exchange, there’s usually a waiting period before your coverage takes effect. E.g:

  • If you enroll during your employer’s open enrollment period, your coverage will take effect on the first day of the next plan year. In most cases, this is January 1, although your employer’s plan year may not follow a calendar year.
  • If you are enrolled in your employer’s plan due to a qualifying event, your coverage will begin on the first day of the following month.
  • If you enroll in the Individual Marketplace plan during the fall open enrollment period, in most cases, your coverage will begin on January 1. But in most states, open registration now runs until after December 15, and registrations completed after that date typically go into effect on February 1.
  • If you purchase your own coverage outside of open enrollment (using a special enrollment period), coverage will generally be effective on the first day of the month following your enrollment, but coverage for a newborn or newly adopted child can be retroactive to the enrollment date . Births/Adoptions (prior to 2022, registration typically had to be completed by the 15th of the month to be effective on the first day of the following month, but as of 2022 this is no longer the case in most states).

health insurance for the unexpected

It’s not a good idea to wait until you need to use it to buy health insurance. Even if you are young and healthy, bad things can still happen.

What if you break your hand while washing a wine glass? Stitches in the emergency room can be very expensive. What should I do if I get tripped by a cat while going downstairs? An ankle fracture cannot wait for treatment and may even require surgery.

Even if this happens when you are able to enroll immediately (during a public enrolment period or during a special enrolment period), your enrolment will not be effective immediately. It’s questionable whether you’re willing to wait weeks to get to the emergency room.

And, if your surprise happens outside of open enrollment and you don’t qualify for a special enrollment period, you may have to wait a few months before enrolling.

health insurance cost

The most common reason people don’t have health insurance is that it’s too expensive. But the ACA helps make insurance more affordable for low- and middle-income people. And for 2021 and 2022, the U.S. rescue plan strengthens the ACA’s subsidy, making self-insurance more affordable.

If your income is less than approximately $17,774 (for a single person), you may be eligible for Medicaid (this income limit will increase when the 2022 Federal Poverty Level amount is announced in mid-to-late January 2022). It depends on whether your state has expanded Medicaid, but to date, 38 states and DC have opted to expand Medicaid under the ACA. In states that expand Medicaid, you are eligible if your income does not exceed 138% of the poverty line (multiply the current federal poverty line amount for your family size by 1.38 to see if your income would qualify you for Medicaid ). Note that children and pregnant people can qualify for Medicaid with significantly higher income levels, as shown in this chart.

If your income is too high for Medicaid, you may be eligible for a premium subsidy to pay for a portion of your premium in the exchange. These subsidies are generally only available to people with incomes up to four times the poverty line (based on the previous year’s poverty line figures). But the U.S. rescue plan lifted that limit for 2021 and 2022. Instead, people are required to pay a percentage of their income for the benchmark plan’s premiums, no matter how high the applicant’s income, capped at 8.5% of income (for those with lower incomes, the percentage of income they must pay for the benchmark plan) lower).

To get the subsidy, you have to buy health insurance through the exchange. You can get the subsidy up front, paid directly to your insurance company throughout the year, or you can pay the full price for your insurance and then claim your subsidy on your tax return.

catastrophic plan

If you are under 30, or if you qualify for a hardship waiver (including an affordability waiver), you may be eligible for a catastrophic health plan. While these plans have the highest deductibles and out-of-pocket costs allowed by the ACA, their premiums are lower than the other options available, and at least you’ll get some coverage.

People over the age of 30 cannot purchase disaster insurance unless they have a hardship waiver. It’s also important to note that subsidies cannot be used to help pay for catastrophic programs, so they’re generally not a good option for anyone eligible for subsidies based on income.

Just like any other major health care plan, catastrophic plans can only be purchased during open enrollment or special enrollment.

What about short-term health insurance?

In many states, the initial term for short-term health insurance can be up to one year, and some plans have a total term of up to 36 months. Because short-term health insurance is not regulated by the ACA, it can be purchased year-round. Short-term health insurance can also be effective the day after you apply. But nearly all short-term health plans include a blanket exclusion of pre-existing conditions.

Insurance companies can deny your application outright based on your medical history, but even if they accept you, the plan will include fine print stating that they won’t cover any medical problems you had before the plan went into effect.

Post-claim coverage is common in short-term plans. This means that the insurance company only asks some general medical questions when you apply for coverage, and the policy is issued without the insurance company reviewing your medical history. However, if when you file a claim, the insurance company can comb through your medical records to see if the current claim is related to a pre-existing condition. If so, they can deny the claim (this does not happen with ACA compliant plans as they cover pre-existing conditions).

So if you want to wait until you need medical care and then buy insurance at that point, a short-term plan isn’t going to be the solution.

generalize

Health insurance can only be purchased during a limited enrollment window, either an annual open enrollment period or a special enrollment period due to eligible activities.

So people can’t wait until they get sick to buy insurance. In most cases, this strategy will result in potentially months of waiting for coverage to take effect, making it impractical to obtain care for a medical condition that has arisen. Instead, the best approach is to maintain continuous coverage, even in healthy conditions, so that when a medical need arises, coverage is already in place.

VigorTip words

like any insurance product, health insurance is only effective if there are enough no-claim or low-claim individuals in the pool to balance the cost of high-claim individuals. That’s why it’s so important to maintain health insurance even when you’re very healthy. You have to protect not just yourself, but the entire pool. And you never know when you might need the pool for you – the fittest of us can become a demanding person in the blink of an eye.